What all corporates should be aware of in relation to the Bribery Act 2010.

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Bribery Act 2010

<< News archive June 2010

3rd June 2010

The Bribery Act received a Royal Ascent on 8th April 2010 and is expected to come into force in October 2010.

The Acts defines four new criminal offences:

Offering or paying a bribe
Requesting or receiving a bribe
Bribing a foreign public official. (A specific offence required to comply with the OECD Convention)
A corporate offence of failing to prevent bribery being undertaken on its behalf.

The purpose of the Act is to provide a modern and comprehensive scheme of bribery offences to equip prosecutors and Courts to deal effectively with bribery in the UK and abroad. The Act replaces old and fragmented legislation with a modern and consolidated bribery law, based on the recommendations of the Law Commission.

It creates offences of offering, promising or giving, bribes and requesting, agreeing to receive or accepting of a bribe either in the UK or abroad, in the public or private sectors.

It also creates a discrete offence of bribery of a foreign public official in order to obtain or retain business and creates a new offence in relation to commercial organisations which failed to prevent a bribe being paid by those who performed services for or on behalf of the organisation. It will, however, be a defence if an organisation has adequate procedures in place to prevent bribery.

Practical Implications of the Bribery Act 2010 for Organisations

All commercial and public-sector organisations should:

Prohibit bribery in any form whether direct or indirect and buy for the organisations.
Commit to implementing systems to counter bribery.

Larger companies’ anti-bribery systems and procedures should additionally include:

A statement of values
A code of conduct
Detailed policies and procedures, including, for example policies on gifts, hospitality, facilitation payments, vetting outside agents and advisers, logging and political contributions.
Training and guidance.• Detailed management procedures, for example regular auditing of compliance.
Internal controls.
Oversight.
Monitoring and assurance.
Whistle blowing procedures.

Organisations will need to:

Review the adequacies of their internal procedures to prevent bribery.
Put in place staff training and ensure that they have written procedures available to staff and contracting consultants.
Consider incorporating these into contracts of employment and service and enable the employer to terminate employment or engagement in the case of breach.
Consider including standard clauses in their commercial contracts that replicate the clauses prohibiting bribery and corruption that are commonly used in public sector contracts.
Carry out due diligence before entering into arrangements with other parties.
Ensure that appropriate checks are carried out during the processing of payments.
Assess all processes in the context that a successful prosecution for failure of a commercial organisation to prevent bribery could cause the organisations disbarment from public contracts under section 23 of the Public Contracts Regulations 2006.
Understand how they will deal with an allegation of bribery or corruption made within the company or in public. For a public allegation, a response to a traditional print, visual or audio media alone may not effectively reduce potential damage to the reputation, because the allegations may emerge and spread via small campaigning groups, specialist blogs and other online activities.

Serious Fraud Office (SFO) guidance on overseas corruption

On 21st July 2009 the SFO, one of the bodies whose consent is required before proceedings can be instituted under the Bribery Act and who will be responsible for enforcing the Bribery Act in respect of overseas corruption, published a press release setting out its approach to dealing with overseas corruption. The guidance sets out the SFO’s policies, which are designed to encourage businesses to self-report overseas corruption.

Comment

Currently there is no guidance as to what “adequate procedures” actually means, although the government has indicated that it will issue guidance three months before the new law becomes effective.

The Act does not recognise the concept of facilitation payments, although they are accepted in other jurisdictions as a necessary evil. While the policy appears to be that facilitation payments are best handled through the sensible use of discretion not to prosecute, the difference in approach will create a certainty for companies which are subject to jurisdictions which take a different approach to that envisaged in the Act.